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Pulse Secure looks to channel to lead creative disruption in growth of Virtual ADC business

Pulse Secure is seeing strong momentum in its virtual ADC business this year, with the growth of cloud applications, and is looking to both cloud-focused partners and their traditional partners broadening out their business to continue the trend.

Pulse Secure built up its Application Delivery Controller [ADC] business on legacy on-prem hardware, but has made its flagship Pulse Secure appliances available in cloud and virtual form factors this year, in recognition of the inexorable shifts in the market taking place. Last year, they also moved into the Virtual Application Delivery Controller [vADC] market with the acquisition of Brocade’s vADC business, part of their strategy of responding to – and attempting to get in front of – the disruptive trends to the ADC market. While the new business got off to a slow start, as the go-to-market mechanisms transitioned from Brocade, it has rebounded this year. The channel is absolutely critical to vADC success here, and includes both Cloud Service Provider partners as well as traditional Pulse Secure Secure Access partners who are diversifying their businesses.

Pulse Secure attaches considerable value to an analyst report from the end of 2017 from ZK Research, which pointed out the potential for disruption in the market as companies modernize their ADCs. It was based on a survey of 100 U.S.-based respondents across a variety of industry verticals and company sizes.

Historically, the ADC market has been predominantly focused on on-prem legacy applications, but the ZK survey recorded that other use cases are emerging. The survey asked, “Where are you currently deploying ADCs?” The top response, at 47 per cent, was “on-premises, legacy applications” followed by “on-premises private clouds” at 34 per cent. Infrastructure as a service [IaaS] clouds like Azure and AWS were third at 22 per cent, hosting facilities were fourth, at 13 per cent, while platform as a service [PaaS] and containers were each 10 per cent. The report stated that while the on-prem is still a significant majority, it was the legacy option, and the rise of these other deployment models away from hardware and towards more software-centric options, was therefore extremely significant.

“Very rarely do customers switch something out that is working, but that has been the case here,” Gordon said. “With the growth of hybrid models, that is what has been happening. They are seeing new opportunities, and moving into new environments. That’s why the vADC market is growing strongly, while the on-prem ADC is stagnant. In addition, because the move to vADCs can be made without disruption, that encourages them to move, and we are seeing that in green fields adoption.”

The report also found that during the transition, while 37 per cent of customers had no plans to change vendors, and only 4 per cent would definitely change vendors as they modernize, 59 per cent said that they might change.

“One of the fundamental tenets of my research has always been that market share shifts happen when markets transition, and the ADC market is currently evolving,” said Zeus Kerravala, the report’s author. “This is the time when traditional vendors must be willing to disrupt themselves or one of the startups will.”

Pulse Secure’s initial move to creatively disrupt itself with the acquisition of the Brocade vADC business did not get off to a roaring start, but the adjustment issues were short-term. They have now had a 25 per cent increase in revenues since the acquisition, which includes more six-figure deals than ever.

“Following the acquisition, what we saw was a slowdown and slow pickup on storage side,” Gordon said. “Part of that initial drop was the loss of affiliated Brocade storage business. However, Pulse Secure has re-forged the relationship with Hitachi Vantara. We have seen a revival of growth through our partnership with Hitachi, which was one of the key third-party elements. We have seen that business grow solidly to the point, where they asked to be included in this announcement.”

Another key driver in their vADC rebound has been the growth in the Cloud Service Provider business.

“We are seeing a very steady business out of Cloud Service Providers, particularly among the regional Cloud Service Providers,” Gordon said. “We have just been starting to double down in our outreach to those regional and specialty level organizations, especially in areas like the federal market, where we recently announced we were supporting AWS GovCloud.”

Increased use in DevOps use cases is playing a key part in this Cloud Service Provider growth.

“The cloud has been important in driving the virtual side, because of DevOps and other cloud implementations,” Gordon stated. “People are now realizing that they can activate these through the service providers.”

“This year we have been seeing the strong growth continuing in the microservices, containers and cloud deployment models,” said Ajay Bharadwaj, Director of Product Management at Pulse Secure. “Our being a cloud-first load balancer is a major asset there.” They are also seeing good growth in the gaming market, in health care and pharma, and in consulting services.

The channel is critical in Pulse Secure’s strategy in the vADC space. While the company has a hybrid model in its legacy business, the Brocade component had a channel Go-to-Market when it was acquired, and today, very little of that business has been taken direct.

“99 per cent of this business goes through the channel,” Gordon said. “That has been the case across the cloud service providers and specialty integrators, but we also have a significant number of channel partners who sell our Secure Access solutions and traditional hardware-based load balancers, who are interested in selling vADC solutions. In this transitioning market, with customers moving to the cloud, it behooves them to present more than one solution to the customer. And if, like this, you have a solution that is designed and built for the cloud, with a more flexible licensing and deployment model, the route to success is that much faster.”

Pulse Secure is making product road map decisions designed to encourage this trend further.

“We are developing more specialty integration capabilities between solutions for release in the early part of next year,” Gordon indicated. “We are also enhancing the business analytics side of the vADC solution as well as turnkey application support. We have also put forward some incents for bundling to further introduce the vADC product line to our large existing install base through existing partners.”

New partners, particularly Cloud Service Providers, are also welcome, Gordon stressed.

“Cloud Service Providers should be talking to us,” he said. “We do offer significant advantages for their business.”